Creditors to accelerate restructuring of shipping industry

SEOUL, April 19 (Yonhap) -- Local lenders are planning to put 10 to 20 percent of
the nation's 38 largest shipping companies under debt workout or liquidation
procedures as part of an effort to speed up the restructuring of the shipping
industry in the face of the global economic crisis, sources said Sunday.

Banks are expected to single out five to seven shippers with the bleakest
outlooks for debt repayment, profitability and future business before forcing
them to undergo painful restructuring programs or exit the market, the sources
said.
They predicted that one or two of them will finally be weeded out.
Local banks have spearheaded a drive to overhaul shippers and other struggling
industrial sectors, as they have felt the pinch of the global financial crisis
and the slumping economy, with some facing a severe liquidity squeeze.
Under a guideline set by the Korea Federation of Banks, the creditor banks will
categorize the 38 shippers into four groups -- A, B, C and D. Companies falling
into the "C" group will face a debt workout while those in the "D" group will be
categorized as "non-viable" businesses and will face liquidation procedures.
The government plans to create a fund worth up to 4 trillion won (US$3 billion)
to purchase idle ships from B or C-rated companies in a bid to boost their sales
and prevent them from being sold at discount prices.
Meanwhile, the creditors will also begin to assess financial and business
conditions at some 140 small and medium-sized shippers in May, seeking to put 20
percent of them under stringent restructuring programs.
ygkim@yna.co.kr
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